Auto-enrolment pension in Ireland: Your questions answered

Ireland’s Auto-Enrolment (AE) scheme has been 20 years in the making and was finally signed into law in 2024, with a launch date of September 2025. It has also been announced that the scheme will be called ‘My Future Fund’. 

Most employers and employees are asking how auto-enrolment (AE) will operate and how it will affect any existing arrangements they may have in place. Let’s look at what we know so far.

What is auto-enrolment? 

The objective of the proposed auto-enrolment scheme is to ensure that every worker will have access to a workplace pension to supplement the basic State pension. 

The proposed design envisages matching contributions from employers and employees, with a 33% uplift of the employee contribution from the State in place of income tax relief. The initial contribution proposed is 1.5% by both employer and employee and a 0.5% State contribution, totalling 3.5% of an employee’s salary, in year one*.

It is important to note that the rates are based on gross salary but are deducted from net salary in respect of the employee contribution. The phased approach of the scheme will mean that contribution requirements will increase every three years by 1.5% for employer and employee, reaching a total contribution of 14% in year 10, made up of 6% each for employer and employee and 2% from the State. These contributions will apply to earnings up to €80,000*.

When is auto-enrolment starting? 

When the government announced Budget 2025 in October, they stated that the introduction of AE will be sometime at the end September 2025.

Who will be enrolled in an auto-enrolment pension? 

All employee’s aged between 23 and 60, earning €20,000 or more from all employments that are not already included in a workplace pension arrangement, will be automatically enrolled.

How do I enrol?

If you are an employee and are eligible when the scheme launches, the National Automatic Enrolment Retirement Savings Authority will automatically enrol you*. You do not need to take any action.

How much will I contribute? 

The contributions are calculated on your gross salary – your earnings before tax. Your employer will match your contributions, and the Government will contribute an additional amount. You and your employer will pay 1.5% of your annual salary in the first year and the contributions will gradually increase to 14% by year 10.

This table shows the rates you, your employer and the Government will pay**:

This table is an example of a worker earning €20,000 a year**:

Are there maximum contribution limits? 

The current design for auto-enrolment does not include a facility for an employee or employer to make contributions in excess of the fixed percentages of income as previously outlined. It may be possible in future years to make additional voluntary contributions under the auto-enrolment system, but this will not be available at scheme launch.

Therefore, if you want to save more it’s worth considering a private pension especially given the tax benefits you can avail of with a private pension. A financial advisor can help you decide, so seek financial advice to see what the best options are for your circumstances.

If you want to contribute more into your pension fund, a personal pension, Personal Retirement Savings Account (PRSA) or occupational pension might be a better option for you. As mentioned, getting financial advice can help you decide what will work best for you.  

Why is it beneficial for employees to keep and contribute to the auto-enrolment pension scheme? 

Pension auto-enrolment offers several significant benefits to employees:

Increased savings: Automatically enrolling into a pension scheme ensures that if you are an employee, you can start saving for retirement early in your career, leading to potentially larger retirement funds due to compound interest over time.

Ease and convenience: Auto-enrolment simplifies the process for employees, eliminating the need to manually sign up for a pension plan.

Employer and government contributions: Auto-enrolment schemes include contributions from employers and the government, which can significantly boost an employee's retirement savings.

Financial planning: Having a pension plan in place provides employees with greater financial peace of mind. It can also encourage people to think about their retirement and whether or not their pension will be enough to fund the lifestyle they would like to have when they retire.

Simplicity: Pension funds in the auto-enrolment pension scheme will allow for a ‘pot follows member’ approach meaning employee’s savings will be held in the same place if the employee changes jobs and the new employer also uses the auto-enrolment system for their workplace pension

Reduced risk of inaction: Some employees neglect to enrol in a pension plan voluntarily, but auto-enrolment mitigates this risk by making enrolment the default option.

Overall, auto-enrolment is designed to help employees build a secure financial future with minimal effort on their part, leveraging both employer and government support and tax advantages.

When will auto-enrolment commence, and what should I do with my existing personal pension? 

As mentioned, the intention of the government is to launch the scheme at the end of September 2025.

What you should do with your existing private pension arrangement will depend on your personal circumstances. A financial advisor can help you review the benefits of your pension plan when compared with the new auto-enrolment scheme and help you understand what is best for you. You can talk to a Zurich financial advisor and they can provide you with more information to make an informed decision on the best options for you.

Should I stop contributing to my personal pension if I start with auto-enrolment? 

What you should do with your existing private pension arrangement will depend on your personal circumstances. The contribution rates to the auto-enrolment pension scheme are fixed, therefore if you wish to save more for your retirement and want to take advantage of the tax reliefs available under private pensions – which are particularly advantageous for 40% taxpayers – you may wish to keep contributing to your existing private pension.

A financial advisor can explain the benefits of your pension plan when compared with the new auto-enrolment scheme. You can talk to a Zurich financial advisor and they can provide you with more information to make an informed decision on the best options for you.

I’m not in a company pension scheme, should I join one or wait for auto-enrolment?

It's generally considered more beneficial to join your company's existing pension scheme, if they have one in place, rather than relying solely on the auto-enrolment scheme, for a few reasons:

• Company pension schemes usually offer higher employer contributions compared to the minimum contribution requirements of the AE scheme.
• Company pension schemes usually offer more flexible investment options.
• Your company pension provider can give you 24/7 access to your pension, along with helpful tools and calculators to help no matter what life stage you are at.
• You will have access to financial advice and resources to ensure you are on track to meet your retirement goals.

What happens if I change job? 

Pension funds in the auto-enrolment pension scheme will allow for an employee’s savings to be held in the same place if the employee changes jobs and the new employer also uses the auto-enrolment system for their workplace pension.

Can I opt out from auto-enrolment? 

While the proposed scheme is voluntary, the approach is opt-out rather than opt-in. Employees will be able to opt out after six months following commencement, and after six months of each three-year increase (within a two-month window), with employees receiving a refund of their own contributions.

Employer contributions remain invested. Outside these timeframes, the option exists to suspend contributions without a refund. In each case, the employer and State contributions also cease. Employees will automatically be enrolled again two years after cessation with the option to opt out again in due course.

When can I withdraw my auto- enrolment pension? 

You can withdraw your auto- enrolment pension when your reach State retirement age, which is currently 66***.

Can I rely on the State or auto-enrolment for my retirement? 

Many workers expect the State pension to be their main source of income and this reliance on the State pension will place even more pressure on already strained resources. Therefore, auto-enrolment is seen as a viable solution to the pension problem and could encourage people to be more financially aware of the importance of saving for their retirement. 

In order to secure a financial future, starting a pension is one of the smartest financial decisions you can make. Sound advice is invaluable, so it's a good idea to seek advice from a financial advisor. Get financial advice from Zurich for free or find an external advisor to provide you with more information about the pension plans and options. 

The information contained herein is based on Zurich Life’s understanding of current Revenue practice as at October 2024 and may change in the future.

This publication has been prepared for general guidance on matters of interest only and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice.

Sources:

*Gov.ie: Auto Enrolment FAQs

**Citizens Information: Auto Enrolment

***Citizens Information: State pension age